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​ ​ Exhibit 16A-2 Macro AD/AS Models

Question 106

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​ ​ Exhibit 16A-2 Macro AD/AS Models
​
​ ​ Exhibit 16A-2 Macro AD/AS Models ​ ​ In Panel (a) of Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y<sub>1</sub> and price level P<sub>2</sub>. If the federal government or Fed decides to intervene, it would most likely: A) ​increase taxes. B) ​decrease the money supply. C) ​increase the level of government spending for goods and services. D) ​decrease the level of government spending for goods and services.
​ In Panel (a) of Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y1 and price level P2. If the federal government or Fed decides to intervene, it would most likely:


A) ​increase taxes.
B) ​decrease the money supply.
C) ​increase the level of government spending for goods and services.
D) ​decrease the level of government spending for goods and services.

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